What is a portfolio in finance?

In finance, a portfolio is a collection of investments . The term "portfolio" refers to any combination of financial assets such as stocks, bonds and cash. Portfolios may be held by individual investors or managed by financial professionals, hedge funds, banks and other financial institutions.

What is a portfolio theory?

At the heart of modern portfolio theory is the concept of diversification. Diversification involves spreading investments across a range of assets to reduce risk, including stocks, bonds, and alternative assets.

What is a market portfolio?

A market portfolio is a theoretical, diversified group of every type of investment in the world, with each asset weighted in proportion to its total presence in the market. Market portfolios are a key part of the capital asset pricing model, a commonly used foundation for choosing which investments to add to a diversified portfolio.